In Budget 2017, several changes in the method to be followed for computing long-term capital gains, have been proposed. The law has prescribed an elaborate method to compute the long term capital gains. The long term gain on such capital assets, is not just the difference between the net sale price and the cost price. Moreover, the tax payer has the option to invest in another residential house or in capital gains bonds of Rural Electrification Corporation or National Highways Authority of India, in order to save on long-term capital gains taxes. However, any immovable property held for more than three years, is treated as long-term and the profit on such sale is taxed at 20%, plus cess and surcharge. Any immovable asset which is held for three years or less, is treated as a short-term capital asset and any profit made on such an immovable asset is included in your regular income and taxed at the slab rate applicable to you. For computing capital gains, the immovable assets are divided in two categories, based on the holding period. Under the present tax laws, a person is taxed on profit from the sale of any immovable asset held as a capital asset, under the head ‘capital gains’.
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